Intelsat picks up PanAmSat for $3.2bn

Satellite love-in

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Intelsat is to buy PanAmSat for $3.2bn, to form the world's largest satellite operator, providing television and telephony services from 53 satellites.

Intelsat, which has 28 satellites, specialises in the provision of core telephony and advanced data services to developing regions around the world. It had revenues of $1bn in 2004, with net profits of $40m.

PanAmSat has 25 satellites and specialises in providing video content to its customers, which include CNN, Dow Jones, BBC, AT&T, British Telecom and Telstra. It had annual revenues of approximately $800m in 2004.

Intelsat is to pay $25 per share for PanAmSat, which is a 26 per cent premium on the $19.80 at which the company's stock price closed last Friday, and represents a 40 per cent increase on the price investors paid for the stock when the company went public on the New York Stock Exchange only six months ago. Bermuda-based Intelsat will also assume $3.2bn of PanAmSat's debt.

"The combination of Intelsat and PanAmSat creates an industry leader with the ability to provide competitive communications and video services to consumers and businesses," said David McGlade, Chief Executive Officer of Intelsat, in a statement. "The two companies are complementary in customer, geographic and product focus."

McGlade will continue to serve as chief executive of the combined company upon closing. Joseph Wright, currently chief executive of PanAmSat, is expected to become chairman upon completion of the transaction.

The combined companies will have a joint fleet of 53 satellites and will have revenues of $1.9bn. Its next biggest competitor will be SES Global, which is based out of Luxembourg and operates 35 satellites, out of a total of 270 commercial satellites circling around the globe. The announcement comes only six weeks after PanAmSat, announced that it bought the EuropeStar satellite and multiple European orbital slots from the French telecommunications equipment giant, Alcatel.